Knowledge-Intensive Innovation: mitigating sub-optimal digital technology adoption in SMEs

This study explores how small and medium-sized enterprises (SMEs) can bridge the persistent gap between digital technology adoption and strategic innovation outcomes. Despite increasing investments in digital business technologies (DBTs), many SMEs fail to translate digital capabilities into innovation-led growth due to low data literacy, limited absorptive capacity, and a lack of structured organisational routines. The paper introduces the concept of Knowledge-Intensive Innovation Practices (KIIPs) as a foundational mechanism to embed data-driven insights into strategic, operational, and tactical decision-making. Drawing on a multi-level, mixed-methods study of 28 Colombian SMEs, the research identifies key barriers to effective digital transformation and demonstrates how KIIPs can enable proactive innovation planning, cross-functional knowledge sharing, and long-term competitiveness. The findings contribute to theory by adapting mainstream innovation frameworks to SME contexts and offer practical guidance for firms and policymakers seeking to enhance digital maturity and innovation responsiveness in resource-constrained environments.